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Nielsen takes stake in NetRatings

Consolidation hits the Internet ratings industry with a one-two punch as a second alliance takes shape between competing firms.

Consolidation hit the Internet ratings industry with a one-two punch this month, as a second alliance took shape between competing firms.

Nielsen Media yesterday said it would take a "significant" equity stake in NetRatings. The resulting service will be known as Nielsen NetRatings and will use Netratings' measurement technology.

The announcement followed closely on the agreement announced earlier this month between Media Metrix and RelevantKnowledge to merge under the Media Metrix name.

Analysts and players alike have long predicted a shake-out among ratings providers. It was no surprise, they say, that the second alliance followed so closely on the first.

"This was something they had to do after MediaMetrix and RelevantKnowledge came together," said Chris Charron, an analyst at Forrester Research. "This gives Nielsen a good sample and good technology. As for NetRatings, this attaches their raft to a stronger ship, at least in terms of name-recognition among advertisers and the resources Nielsen can probably bring to the table."

In addition to combining their respective strengths, the newly merged firms no longer are dividing into so many slices a pie that isn't that big to begin with. According to Charron, advertisers spend about 1 percent of their yearly budgets on ratings and research.

By that measure, the total 1998 market for Web ratings is $130 million. And it's not a cheap market to pursue, either, according to Charron.

"Frankly, it's very expensive to run these panels, to pay people, and to publish this data on an ongoing basis," he said.

Advertisers also stand to benefit from the streamlining. Narrowing the field helps clarify a market confused by competing numbers derived from competing samples and methodologies. With this month's consolidation, the Internet moves one step closer to the current model for television ratings, which is dominated by a single player--Nielsen.

Two Nielsen Media Research executives will join the NetRatings board. Financial terms of the deal were not disclosed.